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Rag Maggots are hostile people that tried to follow Larry Davis's teachings of the plastic arts, but took them too zealously and became insane as a result.
A few Garbage Island NPCs advise you not to fight them, and Rister Syrup even calls Alex "Stupid enough to fight Rag Maggots".

If the player does come in contact with a Rag Maggot, they can escape from the battle or choose to fight. If you choose to escape, make sure to stand completely still until they're a few tiles away from you. Lest you'll end up re-entering combat accidentally.